The Impact of a Construction Land Linkage Policy on the Urban–Rural Income Gap

Promoting coordinated urban–rural development represents a key policy initiative by the Chinese government to advance rural revitalization and promote common prosperity. As a central component of China’s land management system, the Urban–Rural Construction Land Linkage Policy aims at dismantling the historical urban–rural division while fostering balanced regional growth. This research analyzes panel data spanning 2010–2022 across 294 prefecture-level cities, utilizing a multi-phase difference-in-differences (DID) approach to evaluate the policy’s effectiveness in reducing urban–rural income disparities. Empirical findings reveal that the policy implementation has substantially narrowed the income gap between urban and rural populations. Heterogeneity analysis indicates that the policy’s impact is more pronounced in China’s eastern regions. Mechanism analysis reveals that the policy narrows the income gap through two primary pathways: first, by promoting urbanization through facilitating rural-to-urban population transfer and optimizing urban spatial layout. Second, by driving industrial structure optimization through intensive land use that advances agricultural scale and modernization, while improved land resource allocation boosts secondary and tertiary industries. These findings offer empirical support and policy insights for refining urban–rural land management strategies and advancing integrated development.